July 17, 2005 (AP) -- Federal mediators on Thursday offered Northwest Airlines and its mechanics binding arbitration to settle their stalled contract talks. But it's an offer that likely will be rejected, setting up a 30-day countdown to a possible strike or lockout.
Both Northwest and the mechanics union had asked the National Mediation Board to declare their talks deadlocked, a ruling that would free the mechanics to strike and Northwest to lock them out.
"The offer of arbitration is typically a signal that the board believes there is an impasse," said John Remington, a professor of industrial relations at the University of Minnesota. "It's a perfunctory step. Arbitration usually doesn't get any takers."
Yet the union might agree to arbitration to try to claim the "high ground," said Remington, adding he doesn't see Northwest letting an arbitrator settle the mechanics contract.
Thursday afternoon, Northwest said it was "considering our options." Likewise, the Aircraft Mechanics Fraternal Association told its members that it was reviewing the arbitration offer.
There's no deadline for the parties to accept or reject arbitration, said Stephen Olson, a partner with Pittsburgh law firm Kirkpatrick & Lockhart.
In the past four years, Northwest has lost about $3 billion on its operations. Its drive to extract givebacks from its unionized employees has been largely unsuccessful. The target is now $1.1 billion in annual savings. Yet Northwest only has $265 million from pilots and $35 million from management and salaried employees.
The airline's big labor battle now is with its mechanics and cleaners. Northwest has about 4,800 of them left on its payroll, having laid off some 4,400 since the end of 2000.
Northwest wants to cut their wages by about 25% and eliminate more of their jobs, sending more work to outside shops in the United States and Asia.
The mechanics' union has said it would accept 16% wage cuts and other concessions that, the union contends, would save Northwest about $140 million a year. But Northwest argues that the mechanics' offer, at best, only provides about half of the $176 million in annual savings the airline wants from AMFA.
A strike authorization vote by mechanics is to end July 19. The airline has vowed to keep flying if the mechanics strike.
Its contingency plan includes training replacement mechanics, said Bob Rose, president of AMFA Local 5, which represents about 800 mechanics and aircraft cleaners at Metro Airport.
Rose said the airline, through a vendor, is training about 400 people to work on Northwest's fleet in Arizona. The same thing is happening in Toronto and Montreal, he said.
The airline has said that the company has not added replacement mechanics to the payroll.
The company said its contingency plans include more work for its vendors. "This will allow the airline to be prepared to meet all of its aircraft maintenance requirements in an event of a work disruption," the company said.
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A mechanics strike or lockout is possible. Once the National Mediation Board officially declares the talks are deadlocked, the airline and union will have 30 days to nail down a contract.
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Northwest mechanics may have the stomach for a strike against the airline. But do they have the wallets? One Wall Street analyst has doubts.